Sanwa Home Australia Pty Ltd v Sanwa Home Inc

Sanwa Home Australia Pty Ltd (Sanwa Australia), a company with a receiver appointed, brought an action against Sanwa Home Inc (Sanwa Inc), and ReEsta Corporation Co Limited (ReEsta) in the Supreme Court of Queensland. Sanwa Australia sought to enforce a judgment debt of over $35 million against Sanwa Inc, which it pursued through a caveat against the registration of a transfer of a registered mortgage by Sanwa Inc to ReEsta. Sanwa Australia alleged that the transfer was made with intent to defraud creditors, specifically to prevent Sanwa Australia from satisfying its judgment debt and obligations for specific performance. ReEsta argued that Sanwa Australia, as an execution creditor, did not have a caveatable interest and that the transfer was made for valuable consideration and in good faith.

The court considered whether there was a serious question to be tried that the transfer was made with intent to defraud creditors, which would render the transfer voidable under section 228(1) of the Property Law Act 1974. The court found that there was a serious question to be tried, based on the evidence of a close connection between Sanwa Inc and ReEsta, the history of attempts by Sanwa Inc to avoid its obligations to Sanwa Australia, and the suspicious timing and circumstances surrounding the transfer. The court also found that Sanwa Australia arguably had a caveatable interest in the mortgage, as its interest was not limited to the proceeds of sale by way of execution, but a beneficial interest in the property.

The court held that Sanwa Australia had shown cause against the removal of the caveat, and therefore dismissed ReEsta's application. The court also indicated that it would have granted an interlocutory injunction in favour of Sanwa Australia if it were of the view that Sanwa Australia did not have a caveatable interest. The court ordered that costs should follow the event, subject to submissions.